Readwrotes Blog

Copper mining in the late 1980s was dominated by the FreeportMcMoRan Copper and Gold Company, a United States firm, which, through its joint venture subsidiary Freeport Indonesia, had operated the Ertsberg Mountain mine in the Jayawijaya Mountains of Irian Jaya Province since the early 1970s. The mined ore was milled and then sent 115 kilometers by pipeline to Freeport's Amamapare port. The mine produced 32 million tons before becoming depleted. To expand its operations, in 1989 Freeport Indonesia was granted an exploration license by the Indonesian government that added 2.5 million hectares to its original 10,000-hectare concession. A major new discovery on Grasberg Mountain, three kilometers north of the Ertsberg Mountain site, was expected to come under production in 1990 and to produce around 270,000 tons annually by the end of 1992. It was projected to become the world's ...

Coal production declined in the 1970s because of increasing use of subsidized petroleum fuels. However, in the late 1970s Suharto announced a new effort to increase domestic coal use, especially in cement and electric power plants. Total coal production rose steadily in the 1980s to reach 11 million tons in 1990. Most coal reserves were located in southern Sumatra and eastern and southern Kalimantan. Total measured reserves were 4.2 billion tons, with an additional 12.9 billion tons classified as inferred reserves and 15 billion tons of hypothetical reserves. A government mining company, P.T. Tambang Batubara Bukit, produced the majority of coal in 1991, but ten coal cooperation contracts signed between 1981 and 1987 with foreign investors were expected to produce a total of 20 to 25 million tons per year by 1994. Tin Indonesia was one of the world's four major tin producers, ...

Indonesia's mineral resources were dominated by crude petroleum and natural gas but included significant reserves of coal, tin, nickel, copper, gold, and bauxite. Much industrial development was based on increased domestic processing of oil and natural gas. Most mineral production was exported after some degree of domestic processing to industrial nations, primarily Japan. In some cases, Indonesia's own mineral intensive industries, such as steel and aluminum, relied on imports of raw materials. Krakatau Steel imported about 2 million tons of high-grade iron ore in 1989, and P.T. Indonesia Asahan Aluminum imported 360,000 tons of alumina from Australia. On balance, however, Indonesia was a net exporter of minerals in large part because of petroleum exports. In 1989 the total value of mineral exports was US$10 billion, almost 90 percent of which was oil or liquefied natural gas; ...

New Order Developments After coming to power, the New Order government supervised the rapid industrialization of the Indonesian economy. Industrial production, as a share of total GDP, grew from 13 percent in 1965 to 37 percent in 1989. The protective trade policies of the 1970s contributed to the changing composition of industry, away from light manufacturing such as food processing and toward heavy industries such as petroleum refining, steel, and cement. These industries were often dominated by government enterprises. Although these large-scale, capital-intensive firms offered few employment opportunities to the rapidly growing labor force, the surge in manufacturing exports begun in the mid-1980s promised to increase employment and the role of private investment in the 1990s. Despite its increasing significance, the industrial sector employed only about 10 percent of the work fo...

Seventy-five percent of Indonesia's total land area of 191 million hectares was classified as forest land, and tropical rain forests made up the vast majority of forest cover, particularly in Kalimantan, Sumatra, and Irian Jaya. Estimates of the rate of forest depletion varied but ranged from 700,000 to more than 1 million hectares per year during the mid-1980s. In a critical evaluation of Indonesian forestry policy, economist Malcolm Gillis argued that deforestation could not be blamed on a single major factor but was instead due to a complicated interplay among commercial logging, Transmigration Program activities, and shifting or swidden cultivation, still practiced largely on Kalimantan. Gillis argued that the most immediate threat to Indonesia's forests was the government promotion of domestic timber processing, whereas the Transmigration Program was the greatest long-term threa...

Fish was the main source of animal protein in the average diet, with a per capita availability of 12.76 kilograms per year in 1988, compared with a total of 3.8 kilograms from all other meats combined. The fishing industry continued to rely on traditional methods and equipment, although the government was attempting to promote motorization for traditional fishing boats. About 14 percent of the 270,000 coastal vessels were motorized in 1980, compared with 2 percent of the total in 1970. Inland fish landings were estimated at 761,000 tons in 1989, an increase of almost 40 percent since 1984; sea fish landings were estimated to be 2.2 million tons in 1989, an increase of 31 percent since 1984. Foreign fishing vessels operating under license contributed to the growing fish exports, which reached 54,000 tons by 1988, an increase of 70 percent since 1980. Most fish exports were shrimp and ...

Smallholders, who owned nearly all of the livestock in the country, used their animals for draft power, manure, meat, and for future sale. Most livestock, including some 16 million goats and sheep, were simply tethered near the home or put out to pasture on communal grazing land. Beef cattle numbered over 10 million in 1989. The water buffalo, the most common draft animal, numbered 3.3 million. Several government-sponsored programs to increase livestock productivity through better extension services to livestock farmers and the expansion of ranching were in operation on the Outer Islands in the early 1990s. Since 1978 the government provided technical assistance to poultry farmers, particularly in or near urban areas. The government also made great efforts to improve the dissemination of superior breeds and modern medicines. Chickens were the fastest growing commercial livestock, num...

Spice crops first attracted Europeans to the East Indies, but the tropical climate and rich volcanic soils offered a fertile laboratory for the introduction of new commercial crops such as sugar, coffee, and rubber. Large private plantations controlled by European and American interests became the backbone of the colonial economy in the late nineteenth century, when the Dutch colonial government began to limit the practice of tax collection by forced crop cultivation on village land. Even at the height of the plantation economy, however, small-scale peasant cultivators were competitive suppliers of a variety of commercial crops. In 1929, just before the world market collapse in the Great Depression, agricultural products were 75 percent of total Netherlands Indies exports, and about one-third of agricultural exports were from small-scale indigenous producers. Although sugar, then the...

Rice Rice was the staple food in the Indonesian diet, accounting for more than half of the calories in the average diet, and the source of livelihood for about 20 million households, or about 100 million people, in the late 1980s. Rice cultivation covered a total of around 10 million hectares throughout the archipelago, primarily on sawah . The supply and control of water is crucial to the productivity of rice land, especially when planted with high-yield seed varieties. In 1987 irrigated sawah covered 58 percent of the total cultivated area, rainfed sawah accounted for 20 percent, and ladang , or dryland cultivation, together with swamp or tidal cultivation covered the remaining 22 percent of rice cropland. The government was intensely involved in the rice economy, both to stabilize prices for urban consumers and to expand domestic output to achieve national self-sufficie...

Roughly 20 million hectares, or nearly 10 percent of Indonesia's total land area, were cultivated in the 1980s, with an additional 40 million hectares of potentially cultivatable land, primarily in Sumatra and Kalimantan. Smallholder cultivation of both food and estate crops predominated, accounting for about 87 percent of total land under cultivation; large plantations accounted for the remaining 13 percent. The pattern of cultivation and landholding in modern Indonesia reflected the distinctive natural ecosystems of Java and the Outer Islands, and the profound impact of colonial agricultural practices. Java was the center of intensive rice cultivation on sawah or flooded cropland. This cultivation demanded rich volcanic soils and a fairly low gradient to permit water control, and supported a dense sedentary population. The Outer Islands ecosystem of swidden, a type of ...

Development Trends During the 1970s and 1980s, Indonesia followed a wellrecognized trend among developing nations: a decline in agricultural production as a share of GDP. The agricultural sector, however, was still vital for several reasons. The vast majority of people lived and worked in rural areas, and most of their income was from agricultural activities. Rice, which dominated agricultural production in Indonesia, was the staple food for most households, urban and rural alike. The government considered adequate supplies of affordable rice necessary to avoid political instability. The New Order's most striking accomplishment in agriculture was the introduction of so-called Green Revolution rice technology, which moved Indonesia from being a major rice importer in the 1970s to self-sufficiency by the mid-1980s. The 1980 population census indicated that 78 percent of the ...

Many developing nations face a similar dilemma: although growth in the modern industrial sector is critical for increasing GDP, it can provide only a small share of total employment opportunities. Indonesia's employment pattern illustrated this dilemma: the industrial sector employed about 6.5 million workers in 1989--only about 9 percent of the total labor force, whereas the agricultural sector still employed 41 million workers--55 percent of the total labor force (services accounted for the remaining 26 million employed workers--35 percent of the work force). The distribution of benefits from economic growth depended largely on how government policies affected employment opportunities nationwide and earnings in agricultural and service sectors. Since the population was still predominantly rural, the benefits of economic growth also depended on the opportunities available in rur...

In the early years of nation building, from 1950 to 1957, a variety of moderate policies were pursued to support the pribumi through subsidized credit from the state-owned Bank Rakyat, or People's Bank, and through limiting certain markets to pribumi business. The nation's first five-year development plan (1956-60) proposed a realistic level of government investment in public infrastructure, but offered little regulation or overall guidance to the private sector. This plan was superseded by dramatic developments in the political and economic sphere, including the 1957 takeover of Dutch enterprises initiated by workers, which led ultimately to state control of this important segment of the economy. About 300 Dutch plantations and 300 firms in other areas such as mining, trade, finance, and utilities ultimately came under the control of the Indonesian government. Dutch manage...